Is Now the Time to Buy Admiral Group plc (ADM)?

LONDON – I’m always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I’m hoping to pinpoint the very best buying opportunities in today’s uncertain market.

Today I am looking at Admiral Group plc (LON:ADM) to determine whether you should consider buying the shares at 1,357 pence.

Admiral Group plc (LON:ADM) I am assessing each company on several ratios:

Price/Earnings (P/E): Does the share look good value when compared against its competitors?

Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?

Yield: Does the share provide a solid income for investors?

Dividend Cover: Is the dividend sustainable?

So, let’s look at the numbers:

Stock Price 3-Yr. EPS Growth Projected P/E PEG Yield 3-Yr. Dividend Growth Dividend Cover
Admiral 1,357p 32% 14.2 14.2 5% 32% 2.2

The consensus analyst estimate for this year’s earnings per share is 95.5 pence (no growth) and dividend per share is 90.3 pence (no growth).

Firstly, I should mention the consensus analyst estimate for this year’s 90.3 pence per share dividend includes potential special dividends the company may declare. (Since its flotation, Admiral Group plc (LON:ADM) has consistently paid special dividends alongside ordinary dividends). Based on the company’s ordinary dividend history, however, and evaluating City forecasts further, I believe the regular payout for this year may well be left unchanged at 43 pence per share.

Anyway, trading on a projected P/E of 14.2, Admiral Group plc (LON:ADM) appears to be slightly more expensive than its peers in the non-life insurance sector, which are currently trading on an average P/E of around 13. In addition, Admiral’s P/E and low near-term projected growth rate give a PEG ratio of 14.2, which cannot help with my analysis.

Currently, Admiral Group plc (LON:ADM) supports a 5% dividend yield, which is slightly above the sector average of 4.7%. However, this yield figure includes a one-off special dividend of 24 pence a share. With the special dividend excluded, I believe the yield could be closer to 3.2% — below the sector average.

That said, Admiral Group plc (LON:ADM)’s regular payout has grown a compounded 32% during the past three years, indicating that the regular payout could soon catch up to that of the group’s peers. Indeed, the regular dividend payout is more than two times covered by earnings, giving plenty of room for further growth.

So is now the time to buy Admiral?
2012 was Admiral’s 20th anniversary and the company’s most successful year to date. Indeed, within the company’s full-year results released only last week, Admiral announced group profits were up 15% to 345 million pounds. However, the company did report a full-year loss of 24 million poundsfor its international operations.

Nonetheless, the majority of Admiral Group plc (LON:ADM)’s divisions performed strongly and profits from the company’s comparison website, confused.com, expanded by 13% during 2012.

Furthermore, Admiral Group plc (LON:ADM) is seeking to expand its international operations and diversify into new markets. For example, the company recently started offering home insurance to its U.K. customers as well as launch a new online comparison website focused on customers within the United States.

Unfortunately, despite Admiral’s special divided and solid growth last year, the firm currently looks expensive compared to its peers and near-term earnings growth. So overall, I believe now does not look to be a good time to buy Admiral at 1,357 pence.

The article Is Now the Time to Buy Admiral Group? originally appeared on Fool.com and is written by Rupert Hargreaves.

Rupert does not own any share mentioned in this article.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!